Days Inventory Outstanding Calculator

Days Inventory Outstanding (DIO) calculator for inventory efficiency

Days Inventory Outstanding (DIO) estimates how many days, on average, your inventory is held before it is sold. If you manage a product business, DIO is a simple way to sanity check whether stock is moving at a healthy pace or getting stuck. Lower is not always better, but extreme values are usually a signal worth investigating.

This calculator uses a standard approach based on average inventory and cost of goods sold (COGS). You enter beginning inventory, ending inventory, COGS, and the length of the period in days. The calculator then estimates your average inventory for the period and converts that into an average number of days of inventory on hand.

The output helps you compare performance across months, quarters, or years, and it gives you a shared language for discussions between operations, finance, and purchasing. When you combine DIO with Days Sales Outstanding (DSO) and Days Payables Outstanding (DPO), you can also use it as an input into cash conversion cycle thinking. Even on its own, DIO is a practical metric for identifying slow-moving inventory and cash tied up in stock.

Assumptions and how to use this calculator

• This calculator uses average inventory = (beginning inventory + ending inventory) ÷ 2.
• DIO is calculated as (average inventory ÷ COGS) × period days.
• Inventory and COGS should be for the same period and the same accounting basis.
• If your inventory is highly seasonal, a simple beginning/ending average can misstate reality.
• DIO is a directional management metric, not a substitute for SKU-level ageing analysis.

Common questions

What does DIO actually mean in plain terms?

DIO is the average time your money sits in inventory before it turns into a sale. If your DIO is 60, it suggests that, on average, inventory is held for about 60 days before being sold. In practice, this is a blended average across fast-moving and slow-moving items.

Is a lower DIO always better?

Not always. Very low DIO can mean you are running lean, but it can also indicate frequent stock-outs, lost sales, or an overreliance on just-in-time supply that may not be realistic. The right target depends on your industry, supplier lead times, minimum order quantities, service level goals, and whether you sell made-to-order or off-the-shelf.

What inputs should I use for inventory and COGS?

Use the inventory valuation and COGS numbers from the same set of financials for the same period. For example, if you are calculating annual DIO, use beginning inventory at the start of the year, ending inventory at the end of the year, and total annual COGS. Mixing periods or using sales instead of COGS will distort the result.

Why does this calculator use average inventory instead of ending inventory?

Using average inventory reduces the effect of timing and one-off purchases. If you only use ending inventory, the metric can swing sharply depending on whether you stocked up just before period end. Average inventory is still imperfect, but it is usually more stable and more comparable across periods.

How should I interpret a sudden increase in DIO?

A rising DIO often means inventory is building faster than it is being sold. That can come from weaker demand, overbuying, new product launches that have not yet found traction, supply-chain changes that forced bulk purchasing, or pricing and assortment problems. The next step is usually to split inventory into fast-moving, slow-moving, and obsolete buckets rather than relying only on a single blended number.